Oil prices declined for a second consecutive month in June, amid a state of anticipation of falls in world's stocks and decrease of production, said a report by the National Bank of Kuwait on Wednesday. On June 21, Brent crude hit its lowest level in ten months, falling to USD 44.8 per barrel (bbl).

Since OPEC/non-OPEC rolled over their production cut agreement for an additional nine months on 25 May, oil prices have fallen by 7 percent, the NBK report added. Crude oil benchmarks, Brent and West Texas Intermediate (WTI), closed June at USD 47.9/bbl and USD 46.0/bbl, respectively, a decline of 15 percent in 2017 on average. Indeed, Brent's performance in the first half of this year was its worst since 1998.

While a late, 8-consecutive day gain at the end of June and in early July-the longest run of gains in seven years-helped spare some of Brent's blushes, there is little escaping the fact that oil bulls have largely deserted the scene and that the markets have fallen into a state of despondency, the report noted.

The chief culprit is the US light tight oil (shale), whose volumes are helping to both offset some of the supplies taken off the market by OPEC/non-OPEC this year and slow the drawdown of crude stocks from storage tanks. According to the IEA, demand growth is expected to firm up to an average of 1.5 mb/d in 2H17 compared to 1.1 mb/d in 1H17, the NBK said.

Based on our own estimates, for the end of 4Q17, a cumulative stock draw of around 240 million barrels could be on the cards, the NBK report said. This would bring the Organisation for Economic Co-operation and Development (OECD) stocks back down to 2.8 billion barrels, not far off OPEC's 5-year average target of 2.75 billion barrels.